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Accountingtech firm Expensify launches AI-powered personal assistant

Credit card issuers have access to a whole lot of big data about their customers. “I’ve talked to card issuers who’ve said we have so much data now, about what our customers buy, how much they pay, where we spend — we don’t even need credit bureau data about these customers anymore,” Gerri Detweiler, head of market innovation at Nav, told Tradestreaming.

And while it’s not surprising that credit card companies know all about their customers’ habits and preferences, what might not be quite as well-known is that accountingtech companies have an impressive dataset on their customers as well. “Through credit card import, we know exactly how much you like Thai food over sandwiches, or where you like to get Thai food, and how long it’s been since you had Thai food,” explained David Barrett, founder and CEO of Expensify. “We know not just where you work but who you work with and who you work for.”

The company, which has Uber and Yahoo among the 25,000 companies from around the world registered on its platform, enables users to upload pictures of business expense receipts to its platform instead of saving them up. These receipts are then automatically analyzed, associated within the right account in the business’ ledger system, checked for fraud and accuracy metrics, and only if there is something amiss are they sent for human review. More exciting for users, perhaps, is the fact that the money arrives in their account the very next day.

So while Expensify might not know as much as a credit card company does about its users, the accountingtech company’s vast database of virtual receipts does give it an ample amount of insight into their users’ lives. It was this rich data set that enabled it to launch Concierge, the platform’s built-in AI virtual assistant, in September 2016. Concierge is Expensify’s move from being a more passive receptacle of information to a proactive force in their users’ lifestyle choices — and payments.

“Our approach to AI is really about leveraging this tremendous insight that we have about the customerand then reaching out to the customer with the best possible anticipation of what their needs are,” said Barrett.

Other accountingtechs have had the same idea. Toronto-based Wave, for example, leverages the data it has on SMB customers to connect them with cash before they reach a cashflow crunch. “Wave holds all of your financial information,” said Rob Maurin, vice president of communications at Wave, told Tradestreaming. “It knows your bank balances, we know who you have invoiced, how much, when they’re due, we know how long we take to pay, [we have] all of these insights on finance and cashflow.”

Unlike Wave, Expensify hopes to grow its AI into a fully-fledged personal assistant, with the predictive capabilities to make customers’ choices simple and fast. The plan is for Concierge to be able to book flights, order Ubers, make restaurant reservations — all based on business expense receipts uploaded to the platform, or even the user’s digital calendar. At present, the virtual assistant is able to do users’ expense reports, take care of their receipts, and export things to their accounting package.

Accountingtech obviously isn’t the only branch of finance looking into predictive personal assistants. Like credit card companies and accountants, banks also have access to an extensive amount of their customers’ spending data, and they’re starting to leverage it. Bank of America, for example, recently launched chatbot Erica, who is supposed to help customers cultivate better money habits through AI, predictive analytics, and cognitive messages.

Concierge raises some interesting questions for Expensify, including the privacy of customer data, and whether service firms will pay-to-play for customers’ travel needs. As far as privacy is concerned, Barrett believes that Expensify is well within acceptable boundaries. “It’s fundamentally the customer’s data, we’re just leveraging the customer’s data to give them the best options.” Nor does he think that Expensify’s revenue model, which currently consists of companies paying nine dollars per user per month, will grow to include payments from restaurants or hotels that want to be first on Concierge’s list of recommendations

“Our business model is more like Amazon Prime than it is like iTunes,” said Barrett. “iTunes tries to nickel and dime you — we just want those nine dollars a month, and we’re just going to offer you more and more value to convince you to pay us that nine bucks a month.”

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Inside Wave’s bundled revenue model

If the Oxford Fintech Dictionary were searching for the 2016 Word of the Year, one of the frontrunners would definitely be bundle. True, as a word that predates fintech by at least four centuries, it has escaped the nearly compulsory fintech trends of misspelling words on purpose or the adding of rogue capital letters. Nevertheless, this unassuming, rather ordinary English word has played a major role in the epic Bank vs. Fintech battles of 2016.

On the one hand, veteran fintech blogger Pascal Bouvier has written compellingly about the unbundling of incumbents as a result of emerging fintechs and about the different ways for banks to deal with the disbanding of their value chain.

On the other hand, Bernard Lunn and Chris Skinner have argued that the prevalent trend is actually one of rebundling, of banks integrating fintech into their own technologies to form one-stop-shops for customers. Lunn approaches the issue from a UX perspective, while Skinner is more interested in banks’ ability to respond to real-time fintech developments, but they’re in agreement that banks are driving the rebundling movement.

There is, however, a third hand: plain old bundling. Bundling is happening within the fintech ecosystem and without the banks, with payment companies like Square and PayPal launching their own lending services for SMBs. In a sense, if banks are becoming or are trying to become more like fintechs, some fintechs are also becoming more like banks.

For Wave, a Canadian company offering cloud-based solutions for accounting, invoices, payments, and payroll, the decision to bundle up was largely based on the need to provide better customer experience. “It was tricky for these business owners even to get support, they would have to go to a third-party to get their answers,” said Rob Maurin, vice president of communications at Wave. “Bringing it in-house creates a more seamless experience and [customers] can get their answers all in one place.”

Wave started offering credit card processing in the U.S. and parts of Canada in 2014, and is in the midst of rolling out an online lending product powered by OnDeck. The company’s bundling of services, however, isn’t just about customer satisfaction. While Wave’s core accounting software is free, the firm’s paid services are a source of revenue that, when applied, can have a profound impact on their customers’ financial health and capabilities.

“Wave holds all of your financial information. It knows your bank balances, we know who you have invoiced, how much, when they’re due, we know how long we take to pay, all of these insights finance and cashflow,” Maurin explained. “We can therefore do risk assessment and creditworthiness assessments far better than any other entity has been able to do before.”

Wave believes that while banks and fintechs may be engaged in a marketshare battle, the real action is happening offscreen, in the markets that are mostly untapped by banks and fintechs alike. The company’s target customers, the microbusinesses of nine employees or less, is such a market. According to Maurin, it costs more for a bank – or even a fintech company – to acquire new microbusinesses than they’re willing to pay.

So they don’t. In 2013, a study by the Association for Enterprise Opportunity found that approximately $52 billion worth of business loans are declined annually. According to the AEO, microbusinesses constituted 92% of all U.S. businesses in 2013, which means that as a whole they aren’t getting the capital they need to grow their businesses. This credit gap isn’t just a major moneymaking opportunity for companies like Wave – it’s a national disaster. The same AEO study found that microbusinesses employ 31% of the public sector and generate $4.87 trillion annually for the U.S. economy.

The fact that Wave’s core accounting software is free has enabled Wave to overcome the costly microbusinesses acquisition process. In fact, all of their signups – between 50-55,000 new businesses each month – are organic. Bundling, however, is what helps microbusinesses get the cash they need and Wave make a profit.

“Once upon a time the notion was reasonably straightforward software, and find ways of revenue that generally included advertising – our business has transformed radically,” Maurin explained. “We still 100% believe in our approach of offering our software for free, but the revenue stream to our company comes much more from the services side of things, from connecting the services that the small business owner needs to financial services.”